Shares in fledgling clean fuel and energy storage firm ITM Power (ITM:AIM) jumped 9.3% to 47p after it managed to bag a big chunk of funding from gas giant Linde.
Sheffield-based ITM makes things called electrolysers, which are a low carbon way to produce hydrogen, making them an attractive option for industries which use hydrogen and are looking to decarbonise the way they do things.
A subsidiary of Linde has taken a 20% stake in ITM at 40p per share, raising £38m in total. The firm also plans to raise another £14m from new and existing institutional investors again at 40p per share.
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In addition, ITM plans to raise up to another £6.8m through an open offer also at 40p per share, taking its total potential fundraising to just under the £60m mark.
The firm also announced a 50/50 joint venture with Linde, which will focus on delivering green hydrogen to large scale industrial projects.
The deal makes sense both for Linde, which doesn’t have the electrolyser tech ITM has, and for ITM which can use the backing from a giant like Linde to help it grow and develop its product at scale.
The money from its fundraising will be used by ITM to improve its manufacturing capability and help both standardise its product and reduce the cost of making it, and also fund its initial contribution to the JV with Linde.
HEAVYWEIGHT DEALS
ITM’s tie-up with Linde, which generated around €15bn in revenues last year, is not the only agreement it has with a heavyweight energy giant.
The firm also has a deal with Royal Dutch Shell (RDSA) to provide it with so-called ‘green hydrogen’ at one of its refineries, and supplies hydrogen refuelling stations to a number of Shell’s petrol forecourts.
According to First Berlin analyst Dr Karsten von Blumenthal, ITM is focusing on what it sees as its ‘most promising’ markets.
These are the hydrogen refuelling stations for fuel cell electric vehicles, as well as power-to-gas applications to store cheap solar and wind power in the form of hydrogen, and renewable chemistry.
‘BREAK EVEN BY 2022’
The company is only small at the moment with a £139m market cap, and revealed in its full year results that losses have widened 44% to £9.3m as it invests significantly to ‘scale up facilities, resources and capacity’.
In the year to 30 April, it only managed to generate £4.6m in sales revenue, but Dr von Blumenthal expects this to rise significantly in future, forecasting a ‘massive scaling up of global green hydrogen production & consumption in coming years.’
He added, ‘ITM Power’s high order backlog and rising tender opportunity pipeline suggest strong sales growth in coming years, which should pave the way to break-even EBIT in full year 2022.’
